BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 1963 HEARING: 6/11/14
AUTHOR: Atkins FISCAL: Yes
VERSION: 6/4/14 TAX LEVY: No
CONSULTANT: Weinberger
LONG RANGE PROPERTY MANAGEMENT PLANS (URGENCY)
Extends, until January 1, 2016, the date by which the
Department of Finance must approve a redevelopment
successor agency's long-range property management plan.
Background and Existing Law
Until 2011, the Community Redevelopment Law allowed local
officials to set up redevelopment agencies (RDAs), prepare
and adopt redevelopment plans, and finance redevelopment
activities. Citing a significant State General Fund
deficit, Governor Brown's 2011-12 budget proposed
eliminating RDAs and returning billions of dollars of
property tax revenues to schools, cities, and counties to
fund core services. Among the statutory changes that the
Legislature adopted to implement the 2011-12 budget, AB X1
26 (Blumenfield, 2011) dissolved all RDAs. The California
Supreme Court's 2011 ruling in California Redevelopment
Association v. Matosantos upheld AB X1 26, but invalidated
AB X1 27 (Blumenfield, 2011), which would have allowed most
RDAs to avoid dissolution.
AB X1 26 established successor agencies to manage the
process of unwinding former RDAs' affairs. With limited
exceptions, the city or county that created each former RDA
now serves as that RDA's successor agency. Each successor
agency has an oversight board that is responsible for
supervising it and approving its actions. The Department
of Finance (DOF) can review and request reconsideration of
an oversight board's decisions.
If a successor agency complies with state laws that require
it to remit specified RDA property tax allocations and cash
assets identified through a "due diligence review" process,
it receives a "finding of completion" from the DOF (AB
1484, Assembly Budget Committee, 2012).
AB 1963 -- 6/4/14 -- Page 2
State law generally requires successor agencies to dispose
of former RDAs' assets and properties expeditiously and in
a manner aimed at maximizing value, as directed by the
oversight board. Asset sale proceeds that are no longer
needed for winding down an RDA's affairs must be
transferred to the county auditor-controller for
distribution to taxing entities within the county.
However, a successor agency that receives a finding of
completion can retain a former RDA's real property assets
in a trust and use those assets subject to provisions of a
long-range property management plan approved by the
agency's oversight board and the DOF. If the DOF has not
approved a successor agency's long-range property
management plan by January 1, 2015, the agency must comply
with the statutes that, with specified exceptions, require
the expeditious disposal of former RDAs' assets. DOF has
issued more than 300 findings of completion. According to
DOF staff, successor agencies have submitted 268 long-range
property management plans to DOF, which has approved 124 of
those plans. State and local officials want the
Legislature to provide more time for DOF to review and
approve the remaining plans.
State law requires the State Controller to review whether
specified asset transfers by successor agencies that
occurred after January 31, 2012 were made pursuant to an
enforceable obligation on an approved and valid Recognized
Obligation Payment Schedule. The Controller must order
available assets that were improperly transferred to be
returned to the successor agency. Upon receiving that
order, an affected local agency must, as soon as
practicable, reverse the transfer and return the applicable
assets to the successor agency. Because it has focused its
efforts on reviewing assets transfers by former
redevelopment agencies, the State Controller's Office has
not yet begun to review successor agencies' post-January
2012 asset transfers. State and local officials want the
Legislature to repeal the requirement that the Controller
must review successor agency asset transfers that occurred
after January 31, 2102.
Proposed Law
Assembly Bill 1963 extends, from January 1, 2015 until
AB 1963 -- 6/4/14 -- Page 3
January 1, 2016, the date by which a redevelopment
successor agency must obtain DOF approval of a long-range
property management plan.
AB 1963 repeals the statute that requires the State
Controller to review successor agencies' transfers of
specified assets to cities or counties and provides for the
return of improperly transferred assets.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . After the State Supreme Court's
Matosantos decision, redevelopment stakeholders feared that
AB X1 26, by requiring successor agencies to expeditiously
dispose of RDA property, would result in a "fire sale" that
wouldn't recover the full value of those public assets. In
response, AB 1484 allowed a successor agency that receives
a finding of completion to provide for an orderly property
disposition process through an approved long-range property
management plan. With only six months remaining before the
statutory deadline for getting plans approved by DOF, more
than 140 plans that have been submitted to DOF are still
awaiting approval. By extending the deadline and ensuring
that all successor agencies have ample time to get DOF
approval for long-range property management plans, AB 1963
protects the public's interest in avoiding a fire-sale of
former RDA property. AB 1963 also repeals a statute that
requires the State Controller's office to conduct a review
of successor agencies asset transfers. The thorough
scrutiny that successor agencies activities' have received
through the oversight board approval and Department of
Finance review process, makes it unlikely that the
Controller's reviews, which have not yet begun, will be
necessary.
2. Urgency . Regular statutes take effect on January 1
following their enactment; bills passed in 2014 take effect
on January 1, 2015. The California Constitution allows
bills with urgency clauses to take effect immediately if
they're needed for the public peace, health, and safety.
AB 1963 -- 6/4/14 -- Page 4
AB 1963 contains an urgency clause declaring that it is
necessary for its provisions to go into effect immediately
to prevent the "fire sale" of property by allowing each
successor agency that receives a finding of completion to
receive an approval for that successor agency's long-range
property management plan as quickly as possible.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Appropriations Committee:17-0
Assembly Floor: 78-0
Support and Opposition (4/5/14)
Support : BRIDGE Housing; California Infill Builders
Federation; California Rural Legal Assistance Foundation;
City of West Hollywood; League of California Cities;
Western Center on Law & Poverty.
Opposition : Unknown.